Berlusconi has until now remained defiant ahead of a key parliamentary vote on Tuesday afternoon, refusing calls from all sides to step down, but Bossi's call could tip the balance against him.

The League, together with many members of the PDL, are believed to want Berlusconi to make way for a new centre-right government capable of facing a huge economic crisis and restoring the confidence of markets without handing power to a transitional administration.

Earlier, in another sign of Berlusconi's sliding grip on power, five PDL rebels said they would not take part in the vote on public financing on Tuesday afternoon (starting at 1430 GMT), putting his majority in serious danger.

However, the centre-left opposition also said it would not vote to expose the weakness of Berlusconi's support while allowing the passage of a vital measure for state financing.

This means the measure will likely pass but Berlusconi could be exposed to a humiliatingly low vote that would ratchet up the pressure to topple him.

Red lights are flashing on bond markets about Italy's uncertainty with the interest rate Rome is forced to pay on government bonds reaching critical levels.

Yields on Italy's 10-year benchmark bonds rose to 6.74 percent on Tuesday before dropping back. Analysts said Italy was reaching the point where Portugal, Greece and Ireland were forced to seek a bailout.

BERLUSCONI DEFIANT

But Berlusconi, who has dominated Italian politics for 17 years, has refused appeals from all sides to step down despite stark signs that he has lost the confidence of markets.

I'm not leaving, was the headline in the fanatically pro-Berlusconi newspaper Il Giornale, owned by his brother.

Speaking before the latest defections, Berlusconi said he had won back enough party rebels to win the vote and he would then table roll-call confidence motions on sweeping economic reforms promised to fellow European leaders.

I want to look those who want to betray me in the face, he said.

If Berlusconi's support falls below around 310 votes in the 630-seat lower house, he will face massive pressure to go. Current calculations seem to put him well below that number.

The opposition says it will likely then table a no-confidence motion which could be held this week.

Guido Crosetto, a government undersecretary, told a morning talk show that he thought the government would win Tuesday's vote but that he was pessimistic about how long it could last after that.

Italy has the third biggest economy in the euro zone and its debt worries are a huge threat in the wider crisis facing the continent's single currency.

However, even if Berlusconi goes, there is no guarantee that reforms to cut Italy's massive debt and boost growth will be quickly implemented. There is no agreement among the political parties on either a national unity or technocrat government to get Italy out of the mess.

Berlusconi says the only alternative to the present government are elections early next year -- which would extend the period of drift, although some analysts say calling of polls would at least establish a point of certainty, as it did in fellow euro zone peripheral economy Spain.

The prime minister has for days been working the phones and sending out emissaries to trying to win back the support of enough defectors to avoid humiliating defeat in the vote on Tuesday, which he has already lost once.

If he is defeated again, Berlusconi could either resign immediately -- thought unlikely -- or be ordered by President Giorgio Napolitano to call a confidence vote.

Berlusconi and his closest allies say appointment of a technocrat government -- the option favoured by markets -- would be an undemocratic coup that ignored the 2008 election result that brought the centre-right to power.